New Mexico AG presses for collection of unpaid taxes

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ALBUQUERQUE, N.M. (AP) — New Mexico Attorney General Hector Balderas is putting more pressure on insurance regulators to collect millions of dollars in unpaid premium taxes from health insurance providers operating in the state.

Balderas in a letter sent Wednesday to Insurance Superintendent John Franchini asked for an accounting of what is owned by each company and what the procedure and timeframe will be for collecting the money.

Officials with superintendent’s office said Thursday that state statute governs the process for reconciling what taxes are owed and how they are collected and that the agency has a responsibility to uphold that process to avoid delays or future litigation.

The attorney general’s letter follows the announcement this week of an $18.5 million settlement with Presbyterian Health Plan to resolve claims of unpaid premium taxes that dated back more than a decade. In making the announcement, Balderas expressed frustration with what he described as lapses in oversight by state regulators.

Heather Widler, a spokeswoman for the Insurance Superintendent, said the office is committed to reconciling each account and collecting all payments due to the state.

A recent review ordered by State Auditor Tim Keller’s office found tax underpayments of $65 million by a long list of companies since 2003. The audit also catalogued the oversight difficulties at the insurance superintendent’s office.

Balderas’ letter mentioned concerns raised nearly a year ago by state finance officials and legislative leaders about the ability of the superintendent’s office to follow through with the collection process. He also called for the collection of any outstanding taxes to be quick and transparent.

Keller has suggested that responsibility for collecting premium taxes may need to be transferred from the Office of the Superintendent of Insurance to another agency.

That is something Franchini has supported, as New Mexico is one of only five states where insurance regulators double as tax collectors.

New Mexico collects a 3 percent tax on insurance premiums, resulting in a significant source of state government revenue.

Aside from Presbyterian, other insurance companies with large estimated tax underpayments include Health Care Service Corporation, which oversees BlueCross BlueShield of New Mexico, Molina Healthcare, Amerigroup and Lovelace.

The audit linked multimillion-dollar tax debts to erroneous overpayment credits. Health insurance companies improperly applied credits for support of the state’s high-risk insurance pool for people who are denied insurance or considered uninsurable.

Officials in the state auditor’s office said Thursday they are encouraged that taxpayers are seeing results from the special audit and that the Presbyterian settlement marked a first step toward collecting what is owed.

“Now is the time for the state to finish the job and collect the rest of the money, for the companies to promptly pay up, and both to prevent this from happening in the future,” said Sunalei Stewart, Keller’s chief of staff.